4.1 & 4.2 Flashcards
Marketing
The anticipation and identification of consumer wants and needs. Must satisfy these wants and needs in order to make a profit.
Market Characteristics
Market Size
Market Growth
Competitors and ease of entry
Differentiated Homogeneous products
Segmentation
Market Size
Total level of sales of all producers within a market. Important as manager can assess wether its worth entering.
Can be measured by:
- Volume (units sold)
- Value of goods sold (revenue)
Market Growth
Percentage change in the total size of a market (volume or value) over a period of time. The rate of growth can depend on wether the market is saturated or not.
Competitors and ease of entry
Ease of entry is the lack of barriers to entry for the establishment of new competitors in a market. Normally, the greater the number of competitors, the easier it is for new ones to join.
Differentiated Homogeneous Products
Homogeneous products are goods that are physically identical or viewed as identical by consumers (milk, petrol)
It will be difficult to stand out and charge higher prices.
Segmentation
Dividing the market into distinct groups of consumers who share common tastes or requirements.
Target Marketing
Focusing marketing activity on particular segments and a specific group/type of people.
Mass Marketing
Selling to the whole market using a standardised product and the same marketing activities.
Marketing requirements
- Building trust: promises made need to be delivered
- Time for delivering
- Relationships: long term relationships have to be built in order to achieve customer loyalty
Consumer Services
The formulation, deformulation, technical, consulting and testing of most consumer products.
Product-led Strategies
Businesses are said to be product-oriented when they focus on the product and its production process rather than the wants of the consumer. This works when:
- Lack of competition
- Product is a technological innovation
- Product is of high quality
- Organisation has the confidence and ability to do it (high reputation and high market presence)
Market-led Strategies
A market/customer-oriented business which continually identifies, reviews and analyses consumers’ needs. They are able to:
- Anticipate changes in the market
- Respond to changes in the market
- Meet the challenge of competition
Social (societal) Marketing
This approach considers not only the demands of consumers but also the effects on all members of society involved in some way:
- Can provide a significant competitive advantage
- Can lead to higher prices being charged
Market Share
Percentage of sales in a particular market held by a product/business. Indicates which business is the market leader. Helps evaluate the success or failure of a business.
Market share = (Firms sales in time period / Total market sales in time period) x 100
Marketing Objectives for Profit Organisations
- Increase market share
- Increase total sales
- Build customer loyalty
- Attract new customers
Marketing Objectives for Non-Profit Organisations
- Maximise revenue from trading activities
- Promote the aims and work of the organisation
- Increase recognition by society
Market Planning
The process of formulating appropiate strategies and preparing marketing activities to meet marketing objectives. A formal written document based on clear awareness of merketing trends, competitor’s actions and consumer wants.
Marketing Planning Main Elements
- Details of the company’s SMART marketing objectives
- Sales forecast to allow progress of the plan to be monitored
- Marketing budget
- Marketing strategies to be adopted (target market, 4P’s, product positioning map, boston matrix, product life cycle analysis)
Marketing Planning Benefits
- Outline stages needed to be completed by marketing department
- Ensures the marketing mix is appropriate and fully integrated (right product, right price, in the right place)
- Helps achieve integration of business functions as all departments
- Ensures appropiate budget is set
Marketing Planning Limitations
- Plans that are not revised to meet changing internal and external conditions will become outdated
- Plans are insufficient in their own, they need to be reviewed constantly
- Must be up-to-date, constantly changing
The Marketing Mix
The key decisions that must be taken in the effective marketing of a product.
The 4P’s:
Product
Price
Place
Promotion
Consumer Profile
A quantified picture of consumers of a firm’s products, showing proportions of age groups, income levels, location, gender and social class.
Bases for Segmentation
Geographic
Demographic
Psychographic
Segmentation: Geographic
Consumer tastes may vary in different geographical areas. Appropiate to offer different products and market them in “location-specific” ways.
E.g clothes in Antarctica and Africa
Segmentation: Demographics
Market can be segmented by age, ethnic background, sex, family size, social class.
E.g. sports car vs mini van
Segmentation: Psychographics
Market can be segmented by lifestyle, personalities, values and attitudes.
E.g increase in health conscience increases sales of organic foods
Segmentation Benefits
- Ensures appropiate prices are set
- Helps develop products that are appropriate to customers and highlights gaps in the market
Limitations of Segmentation
- Research and development and production costs may be high as a result of marketing several different products variation
- By focusing on one or two limited market segments there is a danger that specialisation could lead to problems if consumers change their purchasing habits
Niche Market
A small and specific part of a larger market. Involves identifying and exploiting a small segment of a larger market by developing products to suit it.
Niche Market Advantages
This are disadvantages of mass marketing.
- Can charge higher prices due to speciality of products
- Can avoid competition in the early stages
- Can focus on the needs of the consumer in these segments
Niche Market Disadvantages
This are advantages of mass marketing.
- Larger companies may enter the market and take sales away from the original producer
- Can be more variations in customer spendings
Product Positioning Map
A graph that analyses consumer perceptions of each of a group of competing products in respect of two product characteristics:
Exclusivity
Price
PPM Uses
- Identifies potential gaps in the market
- Helps identify key features of the product that should be promoted heavily
- Can be used to monitor the position of existing brands
Unique Selling Point (USP)
A factor that differentiates a product from its competitors, such as the lowest cost, the highest quality, or the first ever product of its kind.
Benefits of an effective USP
- Effective promotion differentiating product from competitors
- Opportunity to charge higher prices
- Free publicity due to media reporting on the USP
- Higher sales than undifferentiated products
How to differentiate from competitors
- Lowest prices
- Trust: customer loyalty and repeated customers, higher prices can be charged
- Ethical stance: company’s values
- Convenience: can attract customers who have busy schedules
- Product features
